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Tsingtao Brewery: International Marketing Plan Report

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Updated: Oct 22nd, 2021

Introduction

Tsingtao is the largest brewery in China and was founded during the year 1903. It was founded by the German settlers and accounts for some of its domestic market share. German businessmen originally owned the brewery but it was taken over by the Japanese during 1945 when the Japanese took possession of all the holdings in the province of Shandong. But Chinese took over the brewery after the World War II upon the defeat of Japan. The supervision of Chinese for the brewery is under the Nationalist Government in Nanjing but this lasted only until the 1949 because the People’s Republic of China was established and the company became an enterprise that is owned by the state (Yang, 2005).

The beer, Tsingtao Beer, is a standard pilsner having 4.7% alcohol and the leader of almost all breweries. It has been made known to the public as a beer which is brewed with mineral water from the Laoshan spring. This is seen as one of the ingredients why the beer tastes good and adds into its characteristics flavor. But this is just for the beer produced in Qingdao and not for all of its branches. Basically, Tsingtao Beer was brewed with regard to the original ingredients made by the German Reinheitsgebot or the Purity Law which only has water, barley and hops but after its privatization, China added the signature taste of rice (Yang, 2007).

The brewery was forced to focus on the international markets with the consideration that the beer market in China was not progressive until the 1980s (Colley, 2005). While focusing on the international markets, the brewery also tried to sell the product on the domestic market which depicts a competition between other brewery brands and foreign brands as well. The international market for Tsingtao Beer largely accounts for the “Good Harvest of Five Grains Corporation” which is based in Hong Kong. The market share of Hong Kong for the brewery made them develop 300 companies of wholesale network in Hong Kong and effectively market the beer in the domestic scene.

In 1972, the Tsingtao beer was introduced to the United States and became a top-selling Chinese beer in the U.S. The company sustained a leadership in the United States although competition has been very prevalent with the consideration of other brands of Chinese beer such as the Zhujiang and Yanjing. Halewood International Ltd on the other hand is the one responsible for the distribution of Tsingtao Beer in UK and Ireland. Thus, the international market for the China’s beer products account for the Tsingtao Brand as it is distributed in more than fifty countries in the world (Yang, 2007).

Tsingtao brewery had been using high-end raw materials and water from the Laoshan Mountain before the supervision of the People’s Republic of China in 1949. The government motivated the peasants in Shandong to harvest the important raw materials such as the hops and barley. Different incentives are utilized by the government in order to accomplish this objective such as giving out free seeds. The brewery utilized marketing strategies pertaining to the national market and after the replacement to production with the use of the domestic material as the marketing efforts was increased. However, this is seen to be a shortcoming in the international sense of marketing such product. Thus, it accounts for the call of developing an international marketing in order to emerge worldwide (Rowley & Berman, 2000). Initially, the brewery took the consent for an international beer festival in 1991 which has the primary objective of attracting the foreigners to flaunt the brand abroad and for the domestic customers as well. However, a more strong and effective strategy should be developed to be able to be globally competitive especially in introducing the brand worldwide.

Situational analysis

Internal and External factors

Developing an international marketing plan for the Tsingtao Beer should comprise of assessing the internal and external factors of the target market. Introducing the brand in the domestic scene is quite a foundation for the product to adapt globalization and take a position internationally and specifically in England as the target country. The economic condition of England is competitive as it prevails to be the second largest economy in Europe and fifth in the world. It possesses the economic structure of Anglo-Saxon and it has the largest economy among the four United Kingdoms. Hence, it is considered as the center of world economics and tops the chemical and pharmaceutical sectors, technical industries such as aerospace and manufacturing software. Certainly, England is one of the most greatly industrialized countries in the world.

London sets the trend in different industries in United Kingdom which presents profitable economy. The financial particulars of UK are centered to London as it is one of the international leaders in finance and the largest in Europe. UK’s central bank which is the bank of England sets the interest rates and implements the monetary policy. It is seen that London is now focusing in tourism aspects as service industries have emerged in UK. In fact, it ranks as the sixth largest industry in UK and this is why England adapts the recent trend.

Considering this economic factor, Tsingtao brewery should be able to maximize its portfolio for get the interests of tourists for the product. Indeed, the brand can be an attraction for the foreigners because of its label as a Chinese product. It is an effective tool to collaborate with the increasing number of tourists in London and continuously attract international tourists for profits and brand identification.

Competitive Analysis and Target Market

The brewing industry had been held to competition among many breweries in particular areas in the world and England can be regarded as one producer of high-end beers in the world. That was almost a century ago. Competition arises for the Tsingtao beer with other breweries such as the Wye Valley, Wychwood, Woodforde’s, Wood brewery Ltd. (PPL, 2005) and other breweries that are considered as beers of the world. It is expected the introducing the beer in England will more likely be in line with other beer products which are known in the world.

The target market is primarily centered to the tourists as tourism industry progresses in recent times. Tsingtao Beer will be introduced for the taste of European people as well as the other people who happens to visit London. This will be largely set in London because of being the center for tourism in the target country. People in England are also considered to be the target market without any specifications. It is presumed that people will become accustomed to the Asian taste of Tsingtao Beer because some cuisines of England came from the food style which has Asian origin but are twisted into British tastes. In fact, Indian and Chinese cuisines are adapted into the culinary life of British. It thus suggests that the beer will be able to meet the expectations of people in the target country and will be considered for attaining the consumer’s brand loyalty (Purcell & Boxal, (2003).

SWOT Analysis

Strengths for the products are visible on the side of achieving brand loyalty by the consumers because of its ingredients. Using mineral water and its original German style together with the Chinese rice will be able to create a distinction of its taste among any other highly recognized beers in England. Using this point will attract the target market to try the new product and compare with any other brands. The great performance of the brewery in the domestic scene can be a good strength for the company to introduce the product in an international market with the foundation of international beer festival held every year in China to attract foreign visitors. This helps give a good reputation for the company and most importantly the product itself (Kotler & Keller, 2006).

However, the weakness caters to the negative feedback of the consumers and the competition among other large brewery companies. Shortage for the consultants at the operating level of the company is also seen to be one of the business’ weaknesses considering that an international market requires more effort in order to manage the brewery excellently and sustain its competitiveness worldwide (Kotler & Keller, 2006). Internal and external factors are both affected in this manner and thus needs further assessment for t eh business portfolio.

The opportunities can be traced as to the market offers for the product and its uniqueness for having a taste different from any other usual British beers. Partnerships with other progressive breweries can be very helpful to achieve the objectives of Tsingtao Company to introduce the beer brand in the international market.

But threats can be harmful for the company such as its quality issues way back 1990s. Certain issues having the quality as the main topic could be very disadvantageous because it will be impacted on all aspects of the business. In addition to, the life cycle of the product should be maintained on its peak and declining stages should be managed well according to the needs and wants of the target market (Hughes, 2005).

Marketing mix

The modern marketing calls for more than the development of the product quality, pricing attractively and considering its availability for the target customers (Barlon, 2006). The four P’s in marketing; product, price, place and promotion are important for assessing the strategic position of Tsingtao beer in the marketplace.

The product, Tsingtao beer is primarily a beer originated from its German creator and taken over by Chinese. The product was developed into a more innovative one with the use of domestic materials and the taste of Chinese rice. As it was discussed in the earlier context, it finally got its brand name after the stabilization of the People’s Republic of China and supervised the brewery with the Tsingtao brand name. The packaging comes with the picture of a pier and relatively presents the color of a green bottle.

The place for its distribution in England will be mainly in London because it is the main attraction for tourists in the country. While the price settles with its value higher than its domestic price but still remains competitive along with other beer brands in England.

Promotional tools such as advertising will be using trimedia technique such as the Television ad, radio and print ad. Its publicity and sales promotion accounts for the introductory stage of the product and public relations will cater to the development of good rapport with the target market (Kolk, 2003).

McKinsey 7s framework

The seven important details in the framework include the structure, strategy, systems, skills, style, staff and shared values (Patterson, 2008). Structure is referred to as the skeleton of the organization that handles the responsibilities for the allocating the resources and strategy in order to accomplish the goals of Tsingtao brewery in emerging in the international scene. The systems are the way the organization manipulate inside the Tsingtao brewery while the staff is described are the main key players specifically in terms of personnel in the organization such as the employees, engineers and other (Armstrong, 2006). Skills attribute the capabilities of each key player for the success of the brewery with the consideration of the style used in marketing internationally. And the shared values accounts for the guiding principles of the staffs in the Tsingtao brewery for the result of being productivity for the business as well as for the benefit of the target market (Price & Chahal, 2006). Thus, the framework largely points out for the internal aspects of the business.

International marketing objectives

Setting the corporate objectives of the Tsingtao brewery for marketing internationally should consider the acronyms SMART; Specific, Measurable, Achievable, Realistic and Time. The Tsingtao international marketing objectives are listed as follows: a market share objective which is set to accomplish in a specific level of the market share such as attaining the 40% market share of the brewery industry in England by the year 2011. Increasing its sales and profits by 10% in a year should be measured upon its operation. Sustaining its competitiveness along with other beer companies internationally and increasing the brand awareness of the product by the following year should be put on a highlight. Lastly, growing as an international beer from its domestic name should be noted each year and for the next 3 years. And maintain its high level of competency up until the next 5 years with the same brand and product line.

Marketing strategy

Ansoff matrix

In the market development section, it is comprise of the following: prospecting specific locations around London for marketing the Tsingtao beer in hotels where tourists stay, the use of direct selling as the main promotional mix and focusing on the foreigners and other tourists in London in order to achieve international marketing objectives.

Diversification caters for the use of current strategies of the Tsingtao brewery in order to accomplish the economies of scale taking for consideration that England is a new market. The brewery may suffer though but not the whole entity will be affected such as focusing on one area like the advertising campaign for print, even it fails, Television and radio advertising will be the one that will save the advertising process (Godfrey, 2005).

Market penetration uses the promotional mix and develops a strong technique for advertising Tsingtao beer. This may appear through an effective USP for an international market which may boost sales (Baker, 2008), while the last phase of the Ansoff matrix is for the product development. As the objective presents its brand awareness for the following year, the next years will be for the development of other product lines of the beer. The company will be developing new product lines and extensions to be able to increase and widen the scope of the brand. Positioning the brand attributes its product quality consistency in a highly competitive market (Lenskold, 2003).

Primarily, the distribution channels should be considered as the most important strategy that the company should focus on. The new market of Tsingtao beer is now in England and thus it should comprehend with the target market and its other competitors. In order to penetrate an international market, the company should establish a good name for the brand and develop a strategy where in the introductory stage of the product will be able to dominate the scene and leave a brand identification among consumers.

Specifically, advertisements and launching parties are effective strategies in order to introduce the Tsingtao beer for the drinkers. Company goodwill should also be accomplished by the beer company for its distribution channels such as the bars and other stores where the beer will be put up for sale. It will be a good start if an interesting banner ad will be launched for the beer in different places where it can attract the target market like bars and restaurants, and other alcohol stores. An advocacy such as limiting the alcohol drinks for those who drive their cars will also be an example of penetrating the market.

International market should be considered as a large distribution area where in various tactics can be used to get the attention of the target market. Posters and billboards will also be a good advertisement for the product comprising of an excellent illustration strategy. In fact, the main website of the Tsingtao beer in China possesses a good illustration of a home page where in the beer continuously pours down a beer glass and thus makes a very eye-catchy presentation of the product. This illustration and presentation can also be applied through the billboards with the use of high technology to make the design more attractive and realistic. Therefore, the product leaves brand identification among any other competitors and market will be encouraged to try the beer. This is viewed to dominate the international market and has potentials of staying in the growth stage of its product life cycle.

Implementation and control

The international marketing objectives will be implemented with the budget twice as its domestic resources for the establishment. Hypothetically, if the domestic level of the brewery accounts for a 10M budget for its establishment and operation for its 3 branches, the international market in England requires for a 20M budget because of a more high-end business environment and competitive market. In reality, this might appear to be less than the expected figures though.

Other costs should also be considered like the training development and conducting marketing researches for the evaluation of the selected target market.

Conclusion

The international marketing plan for the Tsingtao brewery presented the background for the product, defined the elements under the situational analysis, identified the international marketing objectives, developed a marketing strategy using the Ansoff matrix and presented the implementation and control process for the marketing plan. This is expected to be an effective tool for the brewery to develop a business portfolio in accord with the international market.

References

Armstrong. M. (2006). A handbook of Human Resource Management Practice (10th edition). Kogan Page , London.

Baker, M. (2008), The Strategic Marketing Plan Audit, Cambridge Strategy Publications, p. 3.

Barlon, K.. (2006) “The concept of the marketing mix” Presentation on marketing management, vol 1, pp 2-7-Turku university –Finland.

Colley, L. (2005). Britons: Forging the Nation, 1707-1837, Yale University Press. pp.12.

Godfrey, P. C. (2005). The relationship between corporate philanthropy and shareholder wealth: A risk management perspective. Academy of Management Review, 304, 777-798.

Hughes, M. (2005) “Buzzmarketing: Get People To Talk About Your Stuff”, Penguin/Portfolio, New York.

Kolk, A. (2003). Trends in sustainability reporting by the Fortune Global 250. Business Strategy and its Environment, 12, 279-291.

Kotler, P. & Keller, KL. (2006). Marketing Management, 12th ed.. Pearson Prentice Hall.

Lenskold, J.D. (2003). The Path to Campaign, Customer, and Corporate Profitability by James D. Lenskold. McGraw-Hill Professional.

Paragraph Publishing Ltd. (2005). “Beers of the World”, 2008. Web.

Patterson, L. (2008). Marketing Metrics in Action: Creating a Performance-Driven Marketing Organization. Racom Communications.

Price, A. and Chahal, K. (2006) “A Strategic Framework for Change Management”, Construction Management and Economics, Vol. 24 (3), pp.237–251.

Purcell, J. and Boxal, P. (2003) “Strategy and Human Resource Management (Management, Work and Organisations)”, Palgrave Macmillan, UK.

Rowley, T., & Berman, S. L. (2000). A brand new brand of CSP. Business & Society, 394, 397-418.

Yang, Z. (2007). “This Beer Tastes Really Good’: Nationalism, Consumer Culture and Development of the Beer Industry in Qingdao, 1903-1993”. The Chinese Historical Review 14 (1): 29–58.

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